The Canadian Life and Health Insurance Association has released a critical illness insurance guide to help Canadians better understand the benefits of critical illness insurance and how it works.

Critical illness insurance is less well known than other types of insurance, so the guide helps to fill in the blanks for Canadians who may have questions ask about the product, says Sheila Burns, the CLHIA’s director of health and disability policy. Indeed, this type of insurance can be a financial lifeline for policyholders because it pays out a non-taxable lump sum if they’re diagnosed with a life-altering condition, such as cancer, heart attack, stroke or Parkinson’s disease.

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“If you’re talking to a financial advisor or an insurance advisor and they mention [critical illness insurance], most people aren’t exactly sure what it is. So in the guide we outlined what this type of insurance is and how it differs from other products like disability and life insurance.”

The guide also includes a list of potential covered conditions, a section on underwriting and discussion around some of the common exclusions. “With critical illness it may not be an overall exclusion, but there can be specific [limitations] with some of the conditions you want to make sure you’re aware of,” says Burns. “And like our other guides, at the end we talk about how to make a claim and who to reach out to if you have questions or concerns.”

Critical illness insurance is often sold as an individual policy, but it has started to gain some traction in the group benefits space, she adds, noting this insurance can be less expensive and more accessible if it’s offered in a group plan. The guide also provides an opportunity for employers to help their employees understand the difference between critical illness and disability insurance.

She suggests employers take it one step further and look into options for spousal or child critical illness as well. “For example, one of the common reasons somebody might stop working is to look after a spouse or a child who’s been diagnosed with a critical illness. That could include travel and staying near a hospital. And although that’s an obvious reason to take time off work, you wouldn’t be eligible for a disability benefit. So it’s not an ‘either/or’ situation because critical illness insurance has benefits of its own.”

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